Bank Loans – Online information, advantages, disadvantages, examples

A bank loan can take the form of a small and non-purpose consumer loan with a relatively short maturity, as well as a really large special-purpose mortgage with a maturity of around thirty years.

However, banks also offer medium-term loans of several tens to hundreds of thousands, which the client repays a year, two or even ten years. Even non-purpose, so-called American mortgages can be obtained from the bank, which are always secured by real estate, but the client does not have to prove the use of money.

Bank loans: low price, strict conditions

Bank loans: low price, strict conditions

Loans from banking companies are significantly cheaper than non-bank loans. However, the low price is redeemed by strict conditions that the borrower must meet:

  • The right age – loans are provided to people over 18, some have an upper age limit, such as 65 or 70 years
  • Permanent residence in the Republic – the condition also applies to foreigners. And they have to live with us for more than a year
  • Regular and demonstrable income – and this must be income from strictly defined sources – from employment, from established business, retirement or from another reliable source. For example, work contracts (temporary jobs) with a bank will not succeed. In the case of employment income, the applicant must not be in probation or notice period
  • Sufficient creditworthiness – the ability to repay. The Bank assesses the applicant’s obligations, which may include an overdraft or credit card. And, of course, any other loans
  • The applicant must not be delayed in repayment with another bank and must not have a negative entry in the debtors’ registers (popularly – the bank requires “clean registers”)

Benefits

Benefits

There are many benefits to those who qualify for a loan with a bank:

  • Low price – both the interest rate and the resulting PRAC
  • Professional meeting
  • Large range of offered amounts – from one crown (overdraft) to several million (mortgage)
  • Lower risk of default – due to low loan price
  • Possibility of advantageous consolidation – consolidation of loans

Disadvantages

Disadvantages

One disadvantage is the need to meet strict conditions for the applicant to succeed. However, bank loans are accompanied by many other disadvantages:

  • Strict conditions for applicants
  • Bulky “paperwork”
  • Long approval process
  • Sometimes the need to secure a guarantor
  • Lower flexibility of the bank in dealing with individual situations

Types of bank loans

Types of bank loans

Loans from banking companies take many forms, minimum and maximum heights and purposes of use. And for some, the consumer does not even realize that it is actually a loan. In the offer of banks we find:

  • Overdraft, or an account with an overdraft facility, where you can go so-called minus
  • Credit card paid in stores. The credit card stores money from the bank, not the client. Current account money is on the debit card
  • Consumer loan – a non-purpose loan with a medium-term maturity, usually starts at five thousand, several tens or hundreds of thousands can be borrowed
  • Mortgage – a special-purpose loan secured by the value of the property or the guarantor’s property
  • American mortgage – this form of mortgage is non-purpose, but also secured by real estate
  • Loan Consolidation – is a specific loan in which the bank provides the client with money to repay all previous loans. The client then repays only one bank, and thus can save significantly on fees

Edna Kile Author